Illinois Bankruptcy Court: You Can Give up your Car in a Chapter 13 Case, Even if you can’t Deliver it

Bankruptcy Lawyer

A Judge in the US Bankruptcy Court for the Northern District of Illinois just ruled that you don’t have to give back a car to “surrender” it in a Chapter 13 Plan.  Let’s look at the facts:  A person finances a car at 24.99% interest, and makes some payments on it.  Then, the car was stolen.  The insurance company didn’t cover the claim for the value of the car, and the owner then files for Chapter 13 Bankruptcy relief.  The Debtor in the case (the car owner) then says that she is giving the car up as a part of the payment plan, (using the legal term “surrender”)  and the car lender will need to take that as full payment of their debt.  Problem is that the Debtor can’t physically give back the car, because it was stolen.  The car creditor objects and says that the Debtor can’t do that.

The court, Judge Barnes, said that the Debtor can use his Chapter 13 plan, to surrender, that is, give up the car, without physically delivering the car to the creditor.  Here is a link to the case, In Re Ware,  from the National Association of Consumer Bankruptcy Attorneys. 

What does this mean? It means that if you have a problem, where damage to your car wasn’t covered by insurance, you should talk to a bankruptcy attorney. And, if you cannot turn in your car due to an accident or theft, a bankruptcy case can help you.  This is a very unusual situation, and each person’s situation is different.

Call us for a free in-depth, in-person consultation.  We can review your situation and see what the best solution is for you.

Daniel J. Winter


Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois